The guards - Tova Noel and Michael Thomas - had agreed to deferred prosecution deals last May that required them to admit their guilt with the understanding that charges in a federal indictment would be dismissed if they followed the rules of their agreement for six months.
They also were required to do 100 hours of community service.
Prosecutors last week requested the charges be dropped, and Judge Analisa Torres ordered the dismissal on Monday.
Epstein, 66, was awaiting a sex trafficking trial when he took his life in his cell at the Metropolitan Correctional Centre in August 2019.
The death, a major embarrassment to the US bureau of prisons, sparked intense scrutiny of operations at the federal jail adjacent to two large federal courthouses in lower Manhattan. It is currently closed.
In court papers, prosecutors said Noel and Thomas were at their desks just five metres from Epstein's cell as they shopped online for furniture and motorcycles and failed to make required rounds every 30 minutes.
The indictment alleged that both appeared to have fallen asleep for one two-hour stretch.
Their lawyers blamed their sleepiness on staff shortages that caused them to work excessive overtime.
Lawyer Jason Foy said that Noel, his client, had provided the government with "truthful insight into the toxic culture, sub-par training, staffing shortages, and dysfunctional management of the now closed Metropolitan Correctional Centre. In exchange for Noel's cooperation, all charges against her were dismissed".
He added: "The shortcomings and mistakes made by Ms Noel were a result of inexperience, lack of proper and sufficient training, and being put in a position to fail by the leadership of MCC and the Bureau of Prisons."
Foy said Noel now faces administrative proceedings with the bureau of prisons.
A lawyer for Michael Thomas did not immediately comment.
Epstein's death sparked widespread anger that he would not have to answer for the allegations.
Last week, his former girlfriend, Ghislaine Maxwell, was convicted in Manhattan federal court of sex trafficking and conspiracy charges after a month-long trial.
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